Revised: Obamacare | The Macro View

Catch 22 –

By: Larry Walker, Jr. –

Point #1 – As I pointed out previously here, and as you can see in the top portion of the table below, Mr. Obama has outlined a budget which contains deficit spending of $-3.7 trillion more than the CBO’s Baseline Budget, between the years 2011 and 2020. The CBO’s Baseline Budget was already $-5.9 trillion in the red for the budget years 2011 through 2020. If you start with fiscal year 2010, the CBO’s Baseline Budget deficit was already $-7.3 trillion. The CBO’s estimate of the President’s budget calls for total deficit spending of $-11.2 trillion beginning with fiscal year 2010 and ending in fiscal year 2020. (Note: The baseline budget total is for 2011-2020, so you have to add 2010 to get this figure.) Now if you add the President’s budget deficit of $-11.2 trillion to our National Debt which was $-12.1 trillion at the end of 2009, then the national debt will reach $-23.3 trillion by the year 2020.

Table 1 - Click to Enlarge

Point #2 – You will note in the bottom half of the table above (re-posted below), that the National Debt, which was $-12.11 trillion at the end of 2009, is projected to grow to $-22.12 trillion by the year 2019. (Note: The totals on this table end with fiscal year 2019 to correspond with the scoring of Obamacare.) This represents a percentage increase of 82.6% over the 10 year period. So before Obamacare, the President was already on target to increase our National Debt by 82.6% over the present decade.

Point #3 – Also in the table below, you will note that after implementing Obamacare, if one adds in the savings projected by the CBO of $119 billion over the first decade, then the National Debt is projected to grow to just $-22.00 trillion, or a percentage increase of 81.6% over the decade. This means that Obamacare will decrease the rate of growth of the national debt by just 1.0% in the first decade (82.6% vs 81.6%). In other words, by the year 2019, the National Debt will either be $-22.00 trillion with Obamacare, or $-22.12 trillion without it. (Note: I omitted the other $19 billion of savings which the CBO projected because I do not believe it to be attributable to Obamacare, however this is diminimus.)

Table 2 - Click to Enlarge

Point #4 – You will note that the CBO projects the savings from Obamacare to be $102 billion over the first five years, and only $17 billion over the second five, for a total of $119 billion in the first decade. The greatest savings appear in the years 2013 and 2014, $50 billion and $47 billion respectively. Why would anyone believe that there would suddenly be savings of over $1 trillion in the second decade, when the rate of savings decreases so dramatically in just the second five year period? If you study the numbers closely, the rate of savings from Obamacare declines by 83% from the first five years to the second. Yet, we are expected to believe that the rate of savings will suddenly jump by 740% (to over $1 trillion) during the second decade. This is simply unrealistic. Not to mention, unreliable, because the CBO calculated the savings rate in the second decade as a percentage of GDP. What we don’t have from the CBO is a projection of the Federal Budget that far out. If budget deficits continue to soar during the second decade after Obamacare, then any savings projected will be nullified.

Point # 5 – With government spending so out of control – with the national debt projected to grow to either $-22.12 trillion without, or $-22.00 trillion with Obamacare by 2019 – with the national debt projected to grow by either 82.6% without Obamacare, or 81.6% with it – it’s as if Obama and his Progressive colleagues have chosen to stick their heads in the sand, and to ignore the problem. The problem being the inability to pay for current federal programs. They are giddy and claiming victory because they think they have finally come up with a deficit neutral program, but what have they really done?

What have they done? – The term ‘deficit neutral’ implies that a program is implemented in a way that will not add to the deficit. But what does it mean for us as relates to Obamacare? What does it mean when government spending is already out of control? It means that the government will raise around $500 billion in new taxes, fees and fines in order to pay for a new entitlement program, Obamacare. It’s one thing to raise revenues in order to begin to balance the existing budget, but entirely another to ignore the debt, and to take more money out of our pockets for a new program. Meanwhile, the National Debt continues to grow at essentially the same rate. Obamacare solves nothing. By the year 2020, the national debt will be nearly twice the amount of our current GDP. If we don’t take the debt crisis seriously, then by the year 2020 there will be no Obamacare, no Social Security, no Medicare, no Education, no Defense, and possibly not even a United States of America. Obamacare and its sister entitlement programs are not the solution to our problems, Obamacare and its sister entitlement programs are the problem.

Sources:

http://www.treasurydirect.gov/NP/NPGateway

http://www.cbo.gov/ftpdocs/113xx/doc11355/hr4872.pdf

http://www.cbo.gov/ftpdocs/112xx/doc11231/budgetprojections.xls

Obamacare: A Fiscal Point of View Updated!

Obamacare: A Fiscal Point of View | Updated!

Obamacare: A Fiscal Conservative’s Point of View

– By: Larry Walker Jr. –

Paying for Obamacare, which we can not afford, sounds like the same strategy used to grant people their other Government given right, the right to buy a home, even if they couldn’t afford one. With housing, the Government made lenders come up with scams like interest only loans, variable interest rate loans, and other devices to make a home affordable ‘today’, with hopes that things would work themselves out in the future. That plan caused millions of people to lose their homes and nearly bankrupted the entire global financial industry. That’s the danger. Now the facts.

Click to Enlarge

The table above reveals the Congressional Budget Office’s March 2009 Baseline Projections which were used around the time the Senate’s health care bill was scored. Nothing new here. The United States Federal Government has a problem with out of control spending. The National debt is out of control and at that time was projected to reach $18.7 trillion by the year 2019.

Click to Enlarge

The above table attempts to show you the effect of Obamacare on the National Debt. Since Obamacare is projected to save $82 billion through 2019, I have simply applied the CBO’s initial scoring of the Senate Bill on a straight-line basis (an equal amount for each year). I used straight-line because no one really knows how they come up with this stuff. So after Obamacare, we would save $82 billion over 10 years, right. Well, actually, since the Government was already projected to overspend by $8,824 billion ($8.8 trillion for the math weary) over the rest of the decade, this only represents a savings of 0.93%. And remember, that’s a savings of the amount of deficit spending, not a reduction to the National Debt. Deficit spending is deficit spending in my view.

Click to Enlarge

The final table (above) reveals the revised debt projections as published by the White House. As you can see, just through the year 2013, the Government is already projected to spend $1 trillion more than what was projected in March of 2009. So Obama will already spend $1 trillion more than he projected, and now he’s proposing to knock that down by a whopping $82 billion over 10 years, by destroying the health care industry. And we’re supposed to be happy?

Conclusion: The President is very sincere in his efforts to justify Obamacare as a means of fiscal responsibility. However, he fails to address the main problem – Out of Control Government Spending. Obama himself is projected to spend over $1 trillion more than he projected a year ago. The Federal Government will have a National Debt of $16.2 trillion by the year 2013. Although Obamacare may save 0.93% of Obama’s own, out of control, deficit spending (a percentage which is declining every second) over the next decade, it fails in that:

  1. It will not stop the deficit spending.
  2. It will not pay down the National Debt.
  3. It will not provide health coverage for all Americans.
  4. It will not reduce the cost of health insurance.

And then there’s the question of what’s going to happen after the first decade. Not even the CBO can legally answer that question. In my opinion, Obamacare is nothing but a token bill designed to stroke Obama’s ego. It will have virtually no effect from a fiscal standpoint, and could trigger many negative side effects. So I ask, what’s the point?

__________________________________________________________

Update 3/18/10

The top section of the following table is from the CBO’s March 2010 Baseline and CBO’s Estimate of the President’s Budget here. For the fiscal years 2011 through 2020, the President’s budget came out $3.777 trillion more in the red than CBO’s baseline, resulting in total deficit spending by Obama of $9.761 trillion between 2011 and 2020, or $11.2 trillion from 2010 through 2020.

I overlaid the lower section with the CBO’s stated effect of Obamacare on the deficit, from Table 1 (page 6) of their scoring report, which was released on 03/18/10 here.

Click to Enlarge

So it’s even worse than I stated yesterday. Obama will overshoot the baseline budget by $3.777 trillion, and will add $11.2 trillion to the National Debt between 2010 and 2020. And he thinks that by passing Obamacare and destroying the US Health Care Industry in the process, that it is worth it, in order to save $119 billion (or $138 or whatever) over the first 10 years. If you ask me $119 billion (or $138 or whatever) in savings looks pretty pathetic when Obama and Congress are already on course to increase the national debt by $11.2 trillion in reckless spending.

This makes Democrats giddy? The whole borrow and spend fest makes me mad as hell. And as far as the second decade goes, I don’t see any compelling evidence in the CBO report that would guarantee that the deficit would continue to fall. And even if the deficit would fall by $1 trillion in the second decade, this would only partially offset an additional $10 trillion (or more) of reckless deficit spending if Washington continues on it’s present disastrous path.

And by the way, the report doesn’t say that the deficit will fall by $1 trillion in the second decade. It does, however, mention that the savings generated by the education provisions would outweigh the costs related to the health care provisions. In otherwords, by fundamentally ‘destroying’ the education system, they can justify destroying the health care system, but this only works for ‘giddy’, power grabbing, debt laden, incumbent Democrats.

Sources:

http://www.cbo.gov/ftpdocs/112xx/doc11231/budgetprojections.xls

http://www.cbo.gov/ftpdocs/113xx/doc11355/hr4872.pdf

Cost Analysis Health Care Bill

http://www.whitehouse.gov/omb/budget/fy2011/assets/hist01z2.xls

Obama’s Illogical Health Care Act

Random Thoughts from an Independent Fiscal Conservative

  1. If the insurance industry does away with preexisting conditions, then health insurance costs will go down. Yeah, unless those people really get sick, and then health insurance costs will skyrocket.
  2. If younger workers who don’t want health insurance are forced to buy it, then health insurance costs will go down. Except, of course, for those who don’t pay for health insurance now.
  3. If everyone had health insurance then the quality of care would improve? Unless, of course, we don’t address the quality of health care.
  4. If we had passed Obamacare the Federal government’s monthly budget deficit would have only been $210 billion instead of $220 billion, in February. What a noble achievement. And what about the other $210 billion? Do we perhaps have bigger fish to fry?
  5. If 30 million people who can’t afford to pay one extra dime for health insurance are forced to buy it, then health insurance costs will go down. Except for those individuals who were not paying and now have to pay, and the rest of the population who will have to make up the difference.
  6. We got the Stimulus wrong, but we will get health care right. Fool me once, shame on you. Fool me twice, shame on me.
  7. The reason health insurance costs are rising is because of publicly traded, and (mostly) non-profit health insurance companies greed. Of course it couldn’t be related to the fact that Medicare and Medicaid undercut payments to doctors and hospitals, which makes insurance costs rise for the privately insured.
  8. Nobody complains about Medicare. And why would they? I mean it’s practically free, it’s completely insolvent, and it’s the cause of most of our national debt.
  9. We must pass Obamacare by March 18th. A more noble goal would be to draft a final bill first, then get public feedback, discuss it, debate it, and then vote. Is this deja vu?
  10. The American people want Obamacare to pass. No. The American people want Congress to start over and to calmly and rationally pinpoint the more pressing problems of the day, and to address those with logical and coherent solutions. Solutions that everyone would agree upon. In reality, there are only a few purple shirts out there who are being paid $15 per hour to act like they want it passed. The rest of us (unpaid and under appreciated) are willing to wait for the next Congress and the next president. Hopefully, a president who’s not all tanked up on Nicorette gum. And preferably a Congress who is less concerned with bribes and racketeering, and more concerned with facing facts with logical, non-political solutions.

End of Random Thoughts………

Health Care Expenditures vs Income

Click to Enlarge

A Fiscal Conservative Opines: Where is all the excess?

By: Larry Walker, Jr.

I am once again attempting to overlay data upon data from different sources, not being certain whether any of them are accurate, yet they are all so called ‘reputable’. There are some who will look at the table, above, and think that health care expenditures are out of control. I look at it and my take is that the lack of growth in real incomes is the problem.

In fact, health care expenditures have been on the decline since 2003. Granted I was not able to find the rate of change for 2009, even if there was no increase, health care expenditures have grown faster than incomes, the consumer price index, and GDP. This doesn’t tell me that there is necessarily a problem with health care expenditures. What it tells me … is that there is a problem with the economy.

Over the past ten years, consumer prices have risen by 25% while incomes have only risen by 9%. Does this mean that prices are out of control? Not to me. To me it means that our incomes are not keeping pace with inflation.

GDP is growing slower than prices. GDP is only growing at an average of 1.9% per year. For the past decade, GDP grew by 19% while prices grew by 25%. So again, is the problem with prices, or with GDP?

Let’s be real. Unless prices rise, incomes will not. How can a business provide raises for employees every year unless the business is also raising its prices? One way would be to keep prices static and to increase productivity, which generally means doing more with less employees. Everyone expects to get a cost of living increase each year, however, in order to receive one, your employer must generally raise its prices in line with the consumer price index. Yet, if that was reality, then incomes would be rising as fast as inflation. Yet, prices have risen nearly three times as fast as incomes. So where is all the excess?

My suspicion is that the problem lies more in the area of manufacturing, international trade, unionization, and the growth of government. We don’t make things anymore in America, we have become a service economy. Most of the products that we buy are imported from other countries. Unions are constantly demanding higher wages and better benefits. The number of government employees is growing as is their pay and benefits. The end result is that our Federal and State governments are going broke, jobs are being lost to emerging market economies, and the incomes of non-governmental and non-union employees are going down.

So the question is how do we improve the growth prospects for our economy? The answer lies in finding ways to increase exports and decrease imports, to lower income taxes and reduce the size of government, and to remove the restraints currently being imposed upon the free market. Our economy doesn’t need more controls, but rather less.

You say rising health care costs are at the center of all of our problems. I say, you’re focusing on the wrong statistic. If a man or woman has no way to earn their livelihood, then what good is a government run health care program. You will have your health care, but you will live in poverty. You will be taxed, but you will lack the wherewithal to pay your taxes. The poor will remain poor. The middle class will cease to exist. The government will continue to spend more than it can tax until even it falls by the wayside.

You cannot fix a problem, until you have identified one. So where is all the excess?

If the price of say automobiles rises, yet most of the autos are purchased from Japan, then there’s your answer. Sure, some jobs were provided in America, but the excess (also known as profit) has left the country.

If the price of health insurance has risen, yet most of the insurance is purchased from domestic providers, then where is all the excess? The answer is in a broken governmental system. The government (federal and state) spends nearly twice as much on health care as does the private sector. The government gets its revenue by taxing those who are viable and paying for the health services of those who are not. The government pays less for services than does the private sector which in turn, means prices will rise for everyone to compensate for the shortfall created by government providers. Thus, prices rise, but incomes do not.

A major reason why incomes are not rising is because the cost of income taxes, social security taxes, and medicare taxes are set to rise every year. It’s not that the rates have necessarily changed, but that the income ceilings have. So you work hard to make more than the social security cap, but by the time you reach that goal, the government has raised the bar (or removed it completely). This is not a progressive tax system, it’s a progressive annual tax increase. It’s a system designed to keep our economy in chains.

So where is all the excess? One need only look at our national debt. If there were excess, the United States Federal government would not be $13 trillion in debt. So there is no excess.

The problem lies not in price controls but rather in wealth creation. Wealth is not created through price controls. In fact, wealth is restrained by controlling prices. If prices did not rise, then neither would wealth. Yet, when wealth is not rising along with prices there is a breach.

If every American either worked for the government, or received government services, how would the government be able to continue as a going concern? The answer is that it would not. So then part of the solution, which is ingrained in your soul, is that bigger government is not the answer. On the other hand, if everyone worked in the private sector, and if everyone were able to sustain themselves, what would be the role of government? Most likely the role that was intended by our founders. So once again we can conclude that government is not the solution to our problems, government is the problem.

Message to uncle Sam, “get out of my way, and get off my back.”

End of rant….

References:

http://www.ers.usda.gov/Data/macroeconomics/Data/HistoricalRealPerCapitaIncomeValues.xls

http://stats.bls.gov/cpi/

http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf

http://www.bea.gov/national/txt/dpga.txt

Other Links and Solutions:

http://citizenownership.blogspot.com/2010/02/every-citizen-owner.html

http://citizenownership.blogspot.com/2010/02/expanded-capital-ownership-now.html

http://www.aipnews.com/talk/forums/thread-view.asp?tid=12453&posts=3#M33855

http://www.freerepublic.com/focus/f-bloggers/2460284/posts

Give Me a Tax Cut, or Give Me Death!

Small Business Tax & Toil

By: Larry Walker, Jr.

I have been contemplating all the blood, sweat, and tears shed by Small Business owners such as myself. Having been in business for the past 9 years, I have come to the realization that:

  1. I am paying a hell of a lot in Taxes (and government mandated fees), and

  2. I am feeling mighty underappreciated.

The Federal Government, under the American Recovery and Reinvestment Act of 2009, chose to give a Social Security tax cut, the Making Work Pay Credit, to workers making under $75,000 per year. That’s all well and fine, but what about the Small Businesses who pay those wages? Small Business Owners have to pay double the amount of Social Security and Medicare taxes on our own pay, plus a matching amount on what we pay our employees.

As the owner of an S-Corporation, in order to write myself a paycheck I am hit with 25% in Federal Withholding Taxes, 15.3% for Social Security and Medicare (since as an owner-employee both halves come out of the same pocket), 5% for State Withholding Taxes and Federal and State Unemployment Taxes. Excluding Unemployment Taxes, I have to withhold and pay in 45.3% of my pay every month. On top of that, since I have employees, I also have to match 7.65% of their pay for Social Security and Medicare Taxes.

As a side note, I also have to pay County business license fees, Federal and State license fees, County property taxes, State Sales Taxes, Federal Excise taxes on telephone, cell phone and internet usage, interest and principal payments on a Federal SBA loan and other business debts, professional liability insurance, health insurance, matching retirement contributions, etc. … and then the actual operating expenses. When it’s all said and done, in return for my contribution to society, I get to keep about 20% of my gross income (toil). But lets just keep the focus here on Social Security, Medicare, and Income Taxes.

As an example, let’s say I have to write gross pay checks for myself and my employees of $8,000 per month. And let’s say $5,000 of that is for me, and the other $3,000 is for two employees. In order to pay myself $5,000 I have to set aside $2,265 for taxes ($5,000 * 45.3% = $2,265). In order to pay my employees $3,000 I have to set aside an extra $229.50 ($3,000 * 7.65% = $229.50) to match Social Security and Medicare.

So to summarize my gross pay started out at $5,000, but my net take home pay wound up being only just $3,117.50 (see the chart below). In the end, I have spent a total of $8,612.00. My employees took home $2,770.50, I took home $3,117.50, and the Government took home $2,724.00.

click to enlarge

When times are good and I can afford to take a full paycheck I have to fork over 45.3% of my earnings to the Government. When times are tough and I can’t afford to pay myself a full paycheck I still have to fork over 45.3% of my earnings to the Government. And when the business makes a profit, the Government will be standing there laying claim to another 30% or more of my toils (25% Federal Taxes and 5% State Taxes).

And now the Federal Government, through the Senate’s Health Care Bill, is proposing to:

  • Add an Excise Tax on Comprehensive Health Insurance Plans

  • Burden us with Employer Reporting of Health Insurance Costs on W-2 Forms

  • Hike Taxes on Health Savings Account Withdrawals by 10%

  • Raise the “Haircut” for Medical Itemized Deductions from 7.5% to 10% of AGI

(See How Does the Reid-Obama Health Bill Raise Taxes on Your Current Health Plan?).

If there is any common sense at all in Washington D.C., Congress and the President will realize that Small Businesses employ most of America, and that Small Business owners pay an unfair burden of Social Security and Medicare Taxes. And we receive nothing in return. By nothing I mean that business owners do not get double the Social Security and Medicare benefits for paying twice what the average worker pays into the system. When liberals start whining about tax cuts for the rich, perhaps they should try standing in the shoes of a small business owner. They would not last a week. They would die from their own complaining.

Do Small Business Owners deserve tax relief? You’re damned right! What can you do about it in Washington D.C.? Well, if you want Small Businesses to spend more, hire more, and stop the lay offs, then stop squeezing us.

  1. Give small business Owners an immediate tax cut of 50% of the Social Security and Medicare Taxes on the wages that they pay themselves. This is not only fair, but it would be just that simple.

  2. Or, if you really want to be fair, then give us a 50% tax cut on the Social Security and Medicare Taxes on all the wages that we have paid so far this year. It’s time to act.

Give me a tax cut, or give me death!

Obamacare, Obamanomics and Inverse Logic

Do the math

“If an object is a polygon then it is a triangle (false).”

By: Larry Walker, Jr.

You can’t solve a problem until it has been defined. The Federal government, once again, has failed to define the problem. Being led by the novice, Nobel Prize Winning, Barack Obama, the Congress has become another hostage on the road to Socialism. What is the real problem?

The Problem

Firstly, per the Bureau of Labor Statistics, since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent (1).

Secondly, per my research in, “The IRS as Health Insurance Police,” there are currently 12.6 million delinquent taxpayers who owe the Federal Government $115.5 billion (2).

And finally, per my last blog, “Common Sense vs. Obamanomics,” where are the jobs (3)?

The Plan to Nowhere

The Government’s plan: Pass a massive health care bill with the ‘hope’ that (a) the 12.6 million will pay their back taxes along with the new increase for mandatory health care, and (b) the 15.1 million will miraculously find jobs (on their own) to be able to pay for their health care. Sounds to me like a plan going nowhere.

The Real Cost?

Based on my research in, “The Health Insurance Black Hole,” when it’s all said and done and we have Universal Health Care, the cost will be approximately $747 per month for an individual, and $2,990 per month for a family of four. That’s $35,880 per year for a family, and $8,964 for an individual (4). To me this is an outrageous increase from my present rate of $188 per month with an H.S.A. Plan. And according to Congress, this will reduce the deficit (which they have run up with reckless abandon) in the long-term.

I’m sure! Raising every American’s health insurance costs by $6,708 per year should reduce the deficit in the long run, but what does that do for our individual health? It seems to me that health care reform has just become a crafty way of raising taxes by playing on the sympathies of kindhearted American’s. No matter how you frame it, it’s a tax increase.

“If a policy is a tax increase then it is a tax cut (false).”

Questions Unanswered

  1. How will the 15.1 million unemployed American’s pay for their health insurance? Will the employed have to pay more to cover them?
  2. How will the 12.6 million who already owe back taxes be able to pay them while paying for the new health care tax?
  3. If you subtract the 27.7 million who can’t pay for their health insurance, how much will it really cost those who are employed?

Common Sense vs. Obamanomics

Obamanomics: Putting the Cart in front of the Horse

By: Larry Walker, Jr.

If you caught Steve Wynn on FoxNews Sunday with Chris Wallace today, perhaps like me, you thought of the image above. Mr. Wynn is right! Barack Obama’s entire domestic agenda is based on a false premise. In fact, in all that Obama is pushing his fatal flaw is that he has put the cart before the horse. The cart being comprised of health care reform, economic stimulus, cap-and-trade, tax increases, wealth redistribution, ….etc….etc… And the horse being job creation.

The false premise being that you cannot redistribute what you don’t have. For the 15.1 million Americans who are jobless, giving them health care reform that they cannot afford is meaningless. Solving the problems of the universe through cap-and-trade by raising utility bills for those already on government assistance will only increase the amount needed for such entitlements. In fact without the ability to provide for ourselves, life itself is pretty much meaningless.

Last week 35,000 Americans lined the streets of Detroit hoping for a one time handout. If the government provides this one time handout, what will those people do next month? When the government provides a one time stimulus of $600 (or $250), how far does that go?

Mr. Wynn is right in saying that without job creation there is nothing. Obama is creating a Black Hole wherein an ever shrinking workforce will be forced to pay an ever increasing amount of taxes to support the ever expanding base of unemployed. And it won’t end until the government listens to people like Mr. Wynn and starts to implement tax policies that promote incentives for businesses to expand and hire.

The only way this is going to happen in a timely manner is for the priorities to change. Left and Right must join together as one, and demand that Congress change its priorities. Cap-and-trade, health care reform, so called economic stimulus, tax increases, and wealth redistribution need to be tabled. The number one priority today is job creation and the way to do it is through tax policies.

I live my life one day at a time. As a business owner myself, my revenues are directly affected by the economic condition of my customers. If my customers can’t afford my services, then my business suffers, and those who depend on me suffer. This is something that can’t wait. We can’t wait 4 years for Obama to impose his agenda while people are suffering daily. The uncertainty this administration has imposed on the business community is so thick you can cut it with a knife. We need action today.

“Hey Congress! The horse goes in front of the cart.” Jobs, jobs, jobs, and then you can talk to us about your utopian fantasies.

The IRS as Health Insurance Police

The charge: Breathing without health insurance.

No Health Insurance? You’re going to jail.

By: Larry Walker, Jr.

Many of us had ‘hoped’ for some simplification of the Internal Revenue Code, which has grown from 14 pages to over 17,000 pages since its inception. But it doesn’t look like that will happen anytime soon. H.R. 3200 will increase the burden of the income tax code by making the IRS the primary enforcer of Mandatory Health Insurance.

Did you hear that? You get your ‘mandatory’ health insurance, but you had better file your tax returns, and file them timely and correctly. Not only that, but you will have to determine what kind of health insurance you have and report it on your tax return, and if you don’t have it, or if it’s not acceptable, then a hefty penalty will be imposed.

It’s found in Title IV, Subtitle A, on pages 167-215 called Amendments to IRS Code of 1986. The expanded powers of the IRS in H.R. 3200 would empower the IRS to require taxpayers to show proof of health insurance coverage, collect fines on individuals and employers who did not have adequate proof of health insurance and determine whether your health insurance was a government approved plan.

So let’s see, will this make life easier, or more convoluted? My theory is that it will not only do the latter, but in the process will deprive all American’s of what if any liberty remains.

Linear thinkers, like Obama and others on the left, are incapable of seeing beyond the end of their noses, so it’s up to us to do our part to shed a little light.

According to Table 16 (below), courtesy of the IRS, at the end of 2008 approximately 9.2 million taxpayer cases were in inventory for filing income tax returns with additional taxes owed to the tune of $94.3 billion (including interest and penalties). And approximately 3.4 million taxpayer cases were in inventory for not filing income tax returns at all, and owe around $21.2 billion.

You don’t suppose there’s any chance that the same 12 million people who either don’t pay, can’t pay, or won’t file income tax returns are the same ones lacking health insurance? Imagine that, the very same people who may owe the government over $100 billion now begging for free health insurance. No I’m not blaming them, but I’m just saying, it may very well be that the tax code is too complicated, that penalties are too stiff, or that income taxes are just way too high. But let’s leave that for another century, and let’s entertain our Messiah’s plan to make taxes more burdensome through Government-run Health Insurance.

Now let’s consider some logic. The IRS, a government agency that allows around 15% to slip through the cracks, will be in charge of a health insurance system that lets around 15% slip through the cracks. What will be the outcome? Do you think it’s possible to achieve 100% compliance with the tax code? Just ask the Obama Administration (Geithner) about ‘that one’. And do you think it’s possible to achieve 100% participation in health insurance, or in anything else human?

Short of placing government security cameras in our houses, a micro-chip in our heads, and completely brainwashing us, 100% participation in anything is not a human attribute. The 80/20 principle is generally good enough for us mere mortals. So on that count, the human factor, the plan fails.

Most likely, the outcome of Obama’s far-left, linear, robotic health insurance plan will be one of the following:

  1. The same 85% who currently comply with income tax laws and have health insurance will continue to comply with income tax laws and buy health insurance, while the same 15% remain on the sidelines. (Most likely)

  2. More people will choose to comply with income tax laws, and more will choose to be covered by health insurance. (You wish)

  3. Less people will choose to comply with income taxes, and less will choose to be covered by health insurance. (Probable)

  4. The 85% who currently comply with income tax laws and have health insurance will revolt, and stop paying income taxes and for health insurance. (Possible)

  5. The ridiculous plan will die in committee, or if passed will subsequently be repealed. (Best)

What do you think?

Sources:

http://www.irs.gov/pub/irs-soi/08db16co.xls

http://www.irs.gov/taxstats/article/0,,id=207457,00.html

http://www.wnd.com/index.php?fa=PAGE.view&pageId=109741

Related:

Unreal– Obamacare Violators Will Face Up to One Year in Jail

Health Insurance Co-Ops vs. Government-Run Health Insurance

* More Honest Debate *

By: Larry Walker, Jr. –

What is a Cooperative (Co-Op)? *

A Cooperative is a business organization owned and operated by a group of individuals for their mutual benefit. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it.

There are many types of Co-Ops in the United States. I will attempt to address some of the most common cooperatives. If you belong to a credit union, you are already a member of a Co-Op. My electric and natural gas utility company is an EMC, another word for Co-Op. In the insurance industry, Co-Ops are called Mutual Companies, or Mutual Legal Reserves.

Credit Unions are owned by their members. When you join, you must establish a share account and maintain a minimum balance. Your share account is your capital investment in the company. You are paid ‘dividends’ on your savings and checking accounts. Dividends are your share of the Credit Union’s profits. A Credit Union offers benefits for its members such as preference on home and automobile loans.

An Electric Membership Corporation (EMC) is a service cooperative owned by those who receive its services. There are nearly 1,000 electric cooperatives in the United States. When the EMC makes a profit, those profits are shared with customers through credits to their electric bills, or lower rates.

Health Insurance Co-Ops

Health Care Services Corporation (HCSC) is the largest customer owned health insurer in the United States.

  • HCSC operates the Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma and Texas, employing 17,000 people and serving more than 12.4 million members – 38% in national employer plans, 32% in large local employer plans, 10% in small employer plans, 10% in individual plans and 10% in government plans.

  • HCSC is the fourth largest health insurance company in the United States and the largest customer-owned health insurer. In 2008, the company’s gross revenue totaled $39.9 billion (considering all subsidiaries which are not included in the chart below in accordance with GAAP).

  • HCSC is the most financially secure health insurer in the United States, with a rating of AA- (Very Strong) from Standard and Poor’s, Aa3 (Excellent) from Moody’s and A+ (Superior) from A.M. Best Co.

  • HCSC retains full or joint ownership of a number of subsidiary companies, including Fort Dearborn Life Insurance Co., Dental Network of America, MEDecision, Availity, Prime Therapeutics and RealMed.

If the HCSC model is the type of Health Insurance Co-Op being discussed in Congress, then I am a fan. Yes. Here is an idea that would have strong bi-partisan support. We can agree on Health Insurance Co-Ops. In my opinion Co-Ops are in line with the purest sense of Capitalism. On the other hand, if Congress is talking about some kind of partially Government owned, or Government controlled entity, then I am not in favor.

In fact, I would like to join HCSC, or a similar Co-Op, but unfortunately it only operates in 4 states, and none of the health insurers in my state are co-ops. Fostering increased competition by allowing insurers to operate in all states would be an improvement.

The Plan

So if America wants to convert its health insurance industry to Co-Ops, the question is how? Obviously, it would be unfair, and foolish, to force the existing insurers out of business, so how do you get them to convert?

I am a proponent of Binary Economics. Under Binary Economics, the only role of Government in private enterprise is to offer interest-free loans through its central bank. Existing publicly traded insurers will need to buy back all of their stock in order to make the conversion to mutual companies. Interest free loans from the Government will facilitate this conversion. The loans will be paid back over the long-term out of the profits of the insurers. Once the loans have been paid, the insured will be able to participate in a larger share of company profits. Profits will be shared with policy holders either in the form of dividends, or lower insurance rates.

Interest free loans are not hand-outs, or bailouts. The money gets paid back. Granting interest free loans would be a much better use of taxpayers money than the current foolishness being promoted by certain ‘linear’ thinkers (right and left). The World is not flat. In fact, most good ideas come from outside of the box.

Reforms I can believe in:

  1. Conversion of the Health Insurance Industry to Co-Ops

  2. Tort Reform

  3. Fostering Interstate Commerce for increased competition

  4. No denial for preexisting conditions

  5. Tax Incentives for those paying higher premiums due to preexisting conditions

  6. Tax incentives for purchasing health insurance

  7. Portability of policies

Reforms I don’t believe in:

  1. Making health insurance mandatory

  2. Taxing employers who don’t offer insurance

  3. Expanding Government-Run health care

  4. Excessive Government Regulation

  5. Triggers

click images to enlarge

Sources:

http://www.hcsc.com/about-hcsc/overview.html

http://www.investopedia.com/terms/m/mutualcompany.asp

http://en.wikipedia.org/wiki/Co-op

http://www.waltonemc.com/mycoop/

https://blackandcenter.blog/2009/09/02/government-run-vs-private-health-insurance/

Mopping Up After Obama – HSA’s and Energy Credits

More Honest Debate

Can the Federal Government outsmart itself?

Health Savings Accounts (H.S.A.’s) either work, or they don’t work. The government came up with a great plan, but failed to promote it. That’s what our government does. They solve a problem, and then come back in a couple of years and solve it again. We are seeing it with health care, as well as with energy policy.

Health Savings Accounts are a great idea. I have had one for over three years and have been satisfied with the program. Since I am in control of the spending, I don’t always take the doctors advice about redundant tests and follow up appointments. Since I have to pay for those tests and appointments I make sure that I really need them before making the appointment. If it wasn’t coming out of my pocket, I would be less inclined to question, and more inclined to take every redundant test, and make every redundant follow up appointment, whether I felt I needed it or not. Don’t you dare give me something that works, and then threaten to take it away because the rest of society hasn’t caught on. Either health savings accounts work, or they don’t. And if they do, then the government had better get to the business of promoting them.

Speaking of energy policy, I’m a bit disgruntled that, after spending over $10,000 in home energy improvements, the federal government through a cap-and-trade tax now thinks that wasn’t good enough and they want to raise the cost of energy, thus negating any long-term savings I may have hoped to gain. Either the energy tax credits worked, or they didn’t work. Make up your minds. We got the message already and most Americans have incorporated energy savings mechanisms through the free market. Now the message seems to be that Americans have failed to get the message so now the Government will take over and force energy savings down our throats. So will the Government reimburse me for what I have expended in following its previous advice?

Seems to me that Barack Obama and his left-wing cadre certainly don’t have the best interests of this American at heart. And, well, if the majority of Americans feel the same way, then I would venture to say that Obama doesn’t have the best interests of America at heart.